What Is A Guardianship And When Is It Appropriate?

Guardianship is a legal process appointing a ‘competent adult’ (guardian) to be responsible for the care, custody and control for a ‘vulnerable or incapacitated person’ often referred to as a (ward). A ward is a person who lacks the ability to make or communicate responsible decisions concerning life’s most basic needs.

If you are responsible for or care for someone who is unable to make or communicate responsible decisions concerning daily living activities such as:

  • Providing food, clothing and shelter for themselves;
  • Caring for their own physical health;
  • Managing their own financial affairs;
  • Making appropriate judgments to protect themselves personally, physically and financially;

They may need a guardian.

The need for a guardian may be caused by:

  • A developmental disability such as Autism, Down Syndrome, Cerebral Palsy,
  • Mental illness; Alzheimer’s, dementia, or senility,
  • Traumatic Brain Injury,
  • Accident, illness or other causes.

Duties Of A Guardian

A legal guardian has the power and the responsibility similar to that of a parent toward a minor child.

A guardian must make sure that the ward’s abilities, desires and choices are considered while meeting their basic needs. A guardian has the duty and right to act on behalf of the individual, making decisions affecting their daily living arrangements, medical care, education, and social activities.

Who Can Be A Guardian And How Is A Guardian Appointed?

Any qualified person can be appointed guardian of an incapacitated person. A guardian may be the spouse, parent, adult child, or any other relative with whom the ward has resided for more than six months. A private fiduciary or professional guardian may also be appointed if no family member is able to serve. When there is no person or corporation qualified or willing to act in that capacity, a public fiduciary will be appointed by the court in a guardianship proceeding.

The process involves:

  • Document preparation to request the courts appoint a guardian;
  • Arranging legal representation for the proposed ward;
  • A physician or psychiatrist determining the degree of incapacity;
  • A court visitor/investigator provides an unbiased overview of the circumstances regarding the request for guardianship;
  • If guardianship is appropriate, a judge will make the final decision.

Did You Know?

When a person turns age 18:

  • They become an emancipated adult. This means you can no longer make medical, educational, or legal decisions on their behalf. You must go through the legal process to be appointed guardian by a court.
  • Schools are not required to notify parents of educational related activities, including the IEP process, unless they have been appointed as legal guardians. This includes a person with a developmental disability.
  • Even if you are the appointed guardian and later move to another state, you are required to petition the local court for guardianship.

Legislative Updates

Comparison of Special Needs Trusts and ABLE Accounts

Created and Managed by

Special Needs Trust
Family, Friends, Guardians, Trustees, Caregivers

ABLE Act Account
Families and Qualified Individuals

Who can serve as a Trustee

Special Needs Trust
Family, Friends, Advisors, Institutions appointed by creators of the trust, Court

ABLE Act Account
No Trustee. Custodian of account

Hire/Fire/Change Trustee

Special Needs Trust

ABLE Act Account
Not applicable – Program Administrator

Successor Trustees

Special Needs Trust
Appointed by Trust creator (Grantor)

ABLE Act Account
Not applicable – Program Administrator

Authority to remove Trustee

Special Needs Trust

ABLE Act Account
No – Program Administrator

Authority to make investment decisions

Special Needs Trust
Trustee has sole authority. Beneficiary may not have any authority.

ABLE Act Account
Program Administrator

Control Investment Risk

Special Needs Trust
Family has authority as Trustee

ABLE Act Account
Program Administrator
Range of available investment accounts determined by States

Length of Time to Withdraw Funds

Special Needs Trust
Immediate by Trustee

ABLE Act Account
Must be approved by managing agency unless there is a Debit Card, then bill is submitted for approval.

Distribution of remaining trust funds after death of beneficiary

Special Needs Trust
Creators of Trust (Grantors) decide who receives trust remainder

ABLE Act Account
Payback to Medicaid first, then balance to heirs

Tax Penalties Non-Qualified Withdrawals

Special Needs Trust

ABLE Act Account
Earning Portion subject to regular income tax, 10% penalty and possible State penalty

Who Qualifies

Special Needs Trust
May be established for anyone

ABLE Act Account
Person diagnosed prior to age 26* and receiving SSI or DI under Title II of SS or has an impairment that will result in death or last at least 12 months or is blind and provides a diagnosis by doctor. Eligibility for ABLE does not mean eligibility for SSI or Medicaid.

Authority to change who receives funds after death of beneficiary

Special Needs Trust
Yes, Trust Grantors during their lifetime.

ABLE Act Account
Subject to Payback

Payback to Medicaid after death of beneficiary

Special Needs Trust

ABLE Act Account
Yes – The amount is based on payments after the ABLE acct begins

Ability to choose Financial Advisor

Special Needs Trust

ABLE Act Account
No – investments limited by States

Administrative Fees charged

Special Needs Trust
Family members usually would not charge. Professional managers and institutions have regulated fees

ABLE Act Account

Unique Benefit of Trust

Special Needs Trust
Family retains complete control

ABLE Act Account
Provides an option to put aside funds in a tax free accumulation and distribution account without jeopardizing government benefit eligibility as long as the account is in compliance.

Maximum Annual Deposit

Special Needs Trust

ABLE Act Account
$14,000 – If amount is exceeded, it is no longer considered an ABLE Account. Assets are a “countable resource.”

Maximum Total without jeopardizing SSI eligibility

Special Needs Trust

ABLE Act Account
$100,000 – If exceeded SSI is suspended. Reinstated if below acct max with no reapplication.

Maximum Total without jeopardizing Medicaid eligibility

Special Needs Trust

ABLE Act Account
Account must be below State 529 plan max for eligibility
Arizona – $421,000

When Can It Be Created

Special Needs Trust
Any time prior to age 65

ABLE Act Account
Anytime as long as the disability began prior to age 26


Special Needs Trust
Files 1041 Income Tax return for Trusts.

ABLE Act Account
Tax Free earnings and distributions

Transferring Assets

Special Needs Trust
Remainderman named to receive assets after death of the beneficiary

ABLE Act Account
Funds may be “rolled” over to another account or to another family member who qualifies.

What can funds be used for

Special Needs Trust
Supplemental needs that do not duplicate government benefits

ABLE Act Account
Qualified expenses ie education, housing, and transportation

Who Can Give Funds

Special Needs Trust
Anyone except the beneficiary (person with special needs)

ABLE Act Account

Tax Deductible Deposits

Special Needs Trust

ABLE Act Account

Number of Trusts/Accounts per Individual

Special Needs Trust

ABLE Act Account
One – Aggregate Contributions are subject to State limits for 529

Assets Allowed

Special Needs Trust

ABLE Act Account
Cash or rollovers from another family member’s account who also qualifies.

Income Tax

Special Needs Trust
A special needs trust can often qualify as a
Qualified Disability Trust – and many distributions are deductible at the beneficiaries tax level
– Requires tax return for trust and beneficiary.

If a 3rd party special needs trust is drafted as a Qualified Disability Trust

  • It has a full $4,000 exemption in 2015, & all distributions from the Trust for the benefit of the beneficiary are taxed to the beneficiary, AND
  • The beneficiary has his/her own, a 2nd exemption of $4,000, & a standard deduction in 2015 of $6,300.
  • A 3rd party special needs trust can shelter a total of $14,300 in 2015 of taxable income.

ABLE Act Account
Tax Free – An ABLE Account with $100,000 (maximum not to lose SSI) would need to earn over 14% for any income tax benefit over a 3rd party SNT.

  • Keep in mind the ABLE Account is subject to a Medicaid Payback.

Three revisions have been proposed for the ABLE Act. Visit for current status.

  1. *Increase age from 26 to 46 to open an account
  2. Rollover funds from a 529 plan
  3. Increase annual maximum deposit from $14,000 to $26,770 ($11,770 is the current poverty level income) if the person is employed

States with Available Programs for Out of State Residents

  • Alabama
  • Minnesota
  • Pennsylvania
  • Alaska
  • Nebraska
  • Rhode Island
  • Illinois
  • Nevada
  • Tennessee*
  • Iowa
  • North Carolina
  • Virginia
  • Kansas
  • Ohio
  • Michigan
  • Oregon

*No Debit Card

States with Available Programs for Residents Only

  • Florida
  • Kentucky
  • Vermont
  • Missouri

ABLE Act Changes of 2018

The following is a brief summary of changes already made and those being implemented  over the course of the year.

  • Annual Contribution Limit: The annual contribution limit is periodically adjusted for inflation.  As a result, for the 2018 tax year, the annual contribution is set at $15,000 (previously $14,000). 
  • Saver’s Tax Credit: ABLE account owners who choose to contribute into their own ABLE account, as opposed to just contributions made by outside contributors, such as friends and family, may now be eligible to take advantage of the Retirement Savings Contributions Tax Credit (otherwise known as the Saver’s Credit). There are additional requirements that must be met in order to qualify for the Saver’s Credit. This is a non-refundable credit.
  • ABLE Financial Planning Act: Provided that the beneficiary is the same individual on both accounts (or a family member of the 529 College Savings account beneficiary as defined in the law), it is now allowable to transfer funds in a 529 college savings account to an ABLE account without incurring any tax or penalty.
  • The funds rolled over from the 529 college savings account to an ABLE account are subject to the annual contribution limit and thus capped at $15,000 for any given tax year (provided that no other contributions into the account have been made during that tax year).
  • ABLE to Work Act: ABLE account owners who have employment may be eligible to contribute above the $15,000 annual contribution limit (possibly up to an additional $12,060 depending on the gross income of the account owner).  The contributions above the $15,000 annual contribution limit would be limited to contributions made specifically by the account owner into their ABLE account.

The ABLE National Resource Center (ANRC) will be closely monitoring these changes to ensure that they are implemented in a manner that provides maximum benefit to individuals with disabilities and their families.  We encourage you to visit the ANRC website ( for further information and updates related to these changes.

ABLE Act Of 2014

The ABLE Act of 2014 (Achieving a Better Life Experience) creates an account for persons with special needs whose purpose is to provide a tax-free savings account that covers qualified expenses such as education, housing, and transportation. The bill does not replace benefits provided through private insurance, the Medi-Cal program, SSI, the beneficiary’s employment, and other sources. It does not replace the need for and benefits provided by a Special Needs and other types of Trusts used in planning for the beneficiary, which we will discuss. There are specific limitations that must be complied with or government benefits may be jeopardized. The 2018 deposit limit has been increased to $15,000 per year.

The Disabled Military Child Protection Act

The new law is a major victory for military parents of children with special needs because it allows them to provide a survivor benefit and also keep their child qualified for various government benefit programs.

Special Needs Trust Fairness Act

The amendment simply adds a phrase allowing the individual to establish her own first-party special needs trust (“established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court”). This small change has big consequences. Disabled beneficiaries with mental capacity to establish their own trust no longer need to seek the assistance of their parents, grandparents, guardians, or the court. They may now act on their own behalf to establish a first-party special needs trust and fund it with their own assets, without any undue legal difficulties.


Q: Why is it so important for us to plan for the future?

A: For the first time, persons with a disability are enjoying a typical life expectancy. Therefore, many will survive their parents and siblings. For this reason, it is important that families prepare a plan for the care and supervision of their loved one after they are gone, or are no longer able to care for them. Planning is not an option, it is a necessity. How else will future care providers know what your wishes are, and what they are expected to do?

Q: When should we begin this process?

A: Yesterday! Regardless of whether the person with special needs is four months old or 40 years old, planning should be done based on their needs today.

Q: What is a Special Needs Trust?

A: This document enables families and friends to leave assets to provide for the person with a disability. When properly drafted, the assets funding this trust are not considered to belong to the person with special needs. The funds in the trust are intended to be used to supplement what government benefits do not provide. The Special Needs Trust provides protection and management of the assets and avoids termination or reimbursement of government benefits during the person’s lifetime.

Q: Do we have to have a large estate to create a Special Needs Trust?

A: No. Since the person with special needs cannot have more than $2,000 of assets in their name to qualify for certain government benefits, the Special Needs Trust is essential to hold and protect assets.

Q: Is there any risk leaving assets to other family members designated to provide for the person with a disability?

A: Yes, even though you trust others to use your assets to provide for your loved one, problems can arise that they will have no control over. If assets are left to another person, those assets legally belong to them. The assets are exposed to loss due to lawsuits, creditors, divorce and the death of the holder of the funds. This individual can be named Trustee in the Special Needs Trust avoiding any situations in their life that might jeopardize these assets and provide protection for the person with a disability.

Q: What is the best way to leave information for the person’s care when you are no longer able to provide for them?

A: The most important part of any plan is the “Letter of Intent.” It provides all the information future care providers will need to know in order to understand the person with special needs. Details about their abilities, diet, medication, therapy, social activities, mannerisms, etc. are included. If the person requires assistance with the typical activities of daily living, such as bathing, dressing, eating, communicating, etc., it is also recommended that a video be made showing and explaining how to assist the person. The “Letter of Intent” is not a legal document.

Q: What are the key issues to address in planning for the future?

A: The first, Lifestyle, addresses the day-to-day assistance, medical, social, employment and other activity care requirements. Next, is Legal Planning that includes Wills, Special Needs Trusts, Guardianship, and Trustees. The third issue, Financial Needs involves the calculating of the person’s monthly budgetary needs and how much is required for the Trust to provide lifetime income for care. Identifying assets to fund the trust and projecting the effects of inflation are also a part of this planning. The final item, Government Benefits, identifies the various Social Security and medical benefits including: SSI, SSA, SSDI, Medicare, Medicaid, and military pensions.

Q: As a parent, do I retain the same legal authority on behalf of my child after they reach age 18?

A: No. Every American citizen is an “emancipated adult” when they reach age 18. Anyone, including parents, must petition the courts to be appointed legal guardian. An alternative to legal guardianship is a “Legal and Medical Durable Power of Attorney” in which a person gives another the right to make medical and legal decisions on their behalf at a time when the person is unable. The person with special needs must be able to sign and fully understand this document.

Q: Whom can I choose to serve as a Guardian and/or Trustee?

A: Anyone whom you feel you can trust to fulfill your wishes and provide the best care and attention for your loved one. You can select a relative, friend, financial institution, or charitable organization to serve as a trustee.